So you think you're in trouble

Tax is Going Digital - Mr Accountant, What Does This Mean for Your Business?

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 06 Sep 2016 17:29:00 +0000

In 2018, whether we like it or not, and for most accountants it’s not; tax is going digital.

Why should I be bothered you ask, its 18 months away. In simple terms because it will fundamentally change the way you do business with your clients. Post 2018 HMRC want small businesses (10 people or less), that’s by the way 95% of all businesses in the UK, to report their tax quarterly. That means as an accountant you need to be in a position to submit a full P and L every quarter. Plus there may well be a requirement to submit a full and adjusted set of accounts for the year end. So potentially you’ll need to submit 5 sets of accounts for every current customer you have from sole proprietors up. Put another way if you currently have 200 customers now, as of April 2018 you’ll have the equivalent of 1000.

Its pretty obvious that you and indeed the whole accounting industry won’t be able to cope with such change without a substantial change to the way you process accounts and manage customer relations.

The caricature of the archetypal accountant small accountant is someone who’s great at detail but not good at dealing with customers, and who pump out compliance work with minimal customer contact. Not anymore. You are going to have to CHANGE.

At our recent Kent Accountants Club we discussed the ramifications of Tax Going Digital, and it soon became apparent that most have not even considered the potential ramifications of this train coming down the tracks. This might be of course because many are still looking at the final phase of Auto Enrolment but most likely it just seems so far away. Our Group has nevertheless agreed to look into the ramifications in more detail over the next 6 months or so to help our members find the best solution for their particular business. (We still have a couple place available in our group for any interested accountants. If you want to know more contact me laurence@exigent-uk.com for more details.)

So what are you going to do about it?

From a customer perspective, I have 3 questions.

When and how will it affect me?

What if anything do you want me to do differently?

What’s it going to cost?

To answer these questions you need a clear strategy and approach.

It could be a radical we can’t support all our clients we simply won’t have the resources so let's pick our best 50%, work with them because they’ll be more prepared to pay our increased fees and we’ll ditch the rest.

or alternatively, we need to change the way we process to support all our clients and they’ll just have to pay what it costs.

The key question is: What IS IT going to cost? And when will you be able to tell me your customer?

The trouble is you won’t be able to answer that question until you’ve understood what your strategy and what that means for your business. What makes it worse, if indeed anything can is that customers aren’t going to be falling over themselves to help you sort this out. Their response is going to be as it is for auto-enrolment, which is: can I ignore it, I don’t want to do it, can't I leave it all up to you as my accountant?

This is why 18 months isn’t long. You’ll need a good 3 months of research and discussion to figure out how best to cope with this change, your strategy. At that point you’ll need to get into detail and in particular what you’re going to need your clients to do differently you help you. The most obvious being that receipts in a bag just won’t work. Information is going to have to be supplied digitally. So everyone, and I mean everyone, is going to have to use an accounts/bookkeeping package like Xero or Quickbooks.

The next question is how does that get implemented?

What about those who want to use something odd or quirky. Given the time constraints of posting 5 weeks after quarter end can you afford to support these other systems?

Who’s going to answer customer queries as it sure isn’t going to be the supplier?

How are you going to get customers up to speed?

How are you going to move from a free system like say VT to a paid system?

How are you going to support your customers if large tranches of your customer base convert over to digital reporting at the same time?

What is your effort and timescale needs to convert each customer to Digital reporting?

How much reviewing are you going to put into each set of accounts?

How much time will this take? As a customer, I want to be paying as little tax as possible for each quarter. I don’t want to overpay tax and get a rebate sometime after my notional year end.

How will you give clients an assessment of the cash-flow implications of reporting and paying tax quarterly?

What’s your sanction if a client won’t conform?

Will you fire awkward clients or will you keep them but double your price?

As you can see there is an awful lot to consider and you only have 18 months and we’ve hardly scratched the surface on process issues or indeed pricing. You can’t rely on others to help you because mostly they’re waiting to see what you do.

In all of this, there is a huge opportunity to gain market share, profitability and peace of mind, but only if you start considering the implications now.

Exigent Consulting provides specialist services for Managing High Growth, and Coaching and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business.

Tax is Going Digital - Mr Accountant, What Does This Mean for Your Business?

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 06 Sep 2016 17:29:00 +0000

In 2018, whether we like it or not, and for most accountants it’s not; tax is going digital.

So what are you going to do about it?

From a customer perspective, I have 3 questions.

When and how will it affect me?

What if anything do you want me to do differently?

What’s it going to cost?

To answer these questions you need a clear strategy and approach.

or alternatively, we need to change the way we process to support all our clients and they’ll just have to pay what it costs.

The key question is: What IS IT going to cost? And when will you be able to tell me your customer?

The next question is how does that get implemented?

What about those who want to use something odd or quirky. Given the time constraints of posting 5 weeks after quarter end can you afford to support these other systems?

Who’s going to answer customer queries as it sure isn’t going to be the supplier?

How are you going to get customers up to speed?

How are you going to move from a free system like say VT to a paid system?

How are you going to support your customers if large tranches of your customer base convert over to digital reporting at the same time?

What is your effort and timescale needs to convert each customer to Digital reporting?

How much reviewing are you going to put into each set of accounts?

How much time will this take? As a customer, I want to be paying as little tax as possible for each quarter. I don’t want to overpay tax and get a rebate sometime after my notional year end.

How will you give clients an assessment of the cash-flow implications of reporting and paying tax quarterly?

What’s your sanction if a client won’t conform?

Will you fire awkward clients or will you keep them but double your price?

Four ways to get out of the detail and concentrate on driving growth

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 23 Aug 2016 10:47:00 +0000

One of the biggest issues for a high-growth business owner is learning how to relinquish day-to-day tasks

so that they can take a more managerial and leadership role. Many businesses live right on the edge of capability and disruption from the slightest unforeseen issues can cause the leadership to fall back into the business detail.

Why?

There are a number of reasons why this happens, the two most common that I come across are:

A failure by the leadership team to understand what their role is. The result being they get involved in everything

Not understanding the difference between a cost and an investment. High-growth companies are profit conscious, but sustainable growth requires proper investment

There are, however, some simple techniques leaders can use to help them avoid these growth limiting issues.

1. Fit for purpose, not perfect

When we start a business we do everything, from washing up to board meetings. As the business grows then we learn that we can’t do everything and so we have to give tasks to other people; we delegate.

This in itself can cause a problem. Why? Because as business owners we’re typically overqualified to do the jobs we’re delegating, which often leads us to have an unrealistic expectation on how certain activities should be performed.

Let me give you an example. A director for a multimillion-pound removal business insisted that he should produce the route planning for his drivers. One day I asked him why he didn’t delegate the task as it was a job that in most businesses would be done by a lower level person. In any case, most of the work was shouldered by the route planning software. His reason was that the people he delegated this job to didn’t do it as well as him. So he saddled himself with a completely unnecessary task for two hours every day.

I went on to ask how much he would expect to pay someone to do the job. ”No more than £25,000,” he said. “And, you pay yourself?” I asked. His reply was “over £100,000 Laurence, and you know that".

“Yes I do,” I said. “So, why are you paying yourself £100,000 to do a job that you’d only pay £25,000 for someone else to do.”

At this point, the penny dropped and he got one of his managers to take over that responsibility. Many times the people who take over a job from you won’t do it as well as you, but they will do it well enough for you not to have to take it back.

2. Question what you are doing

Michael Gerber talks about “getting out of the box”. What he means is, you can’t operate at multiple levels in an organisation at the same time and be effective. For example, you shouldn’t be the sales person, sales manager and sales director. You need to divest yourself of the sales person role before you can properly accept the sales manager role.

My route for achieving this often complicated goal is to ask yourself: “Would I give this task I’m doing to a director of this company?”

From the answers build two lists one under ‘Yes’ and the other under ‘No’. Next, take the ‘No’ list and start to group tasks into common areas (it’s much easier to do this from a list rather than off the cuff during a busy working day).

In a growing company these tasks won’t add up to a whole person’s job, nevertheless, you may well be able to give these connected tasks to others in your business freeing up valuable time for you to spend on more important activities. Rinse and repeat on a regular basis as your business continues to grow.

3. Give yourself a job description

Write down what your role entails and stick to it. This will prevent you from accumulating lots of other tasks which lower your productivity and eat away at your valuable time.

Review it every six months or so and make any changes necessary, trying always to focus more on strategic tasks.

4. See people as an investment!

Many high-growth businesses are under-resourced. This is often because owners see new hires as a cost. Much of this is because we don’t look at people as an investment in the same way we would machinery or another physical asset.

The issue here is to understand that they are an investment and they can deliver value considerably greater than their salaries. Their greatest benefit is that they give those in the rest of the business time, a commodity that is in desperately short supply in most high-growth businesses.

Here are two examples that illustrate what I mean. A high-growth construction business had been plagued by slow payments, but the owner refused to spend £25,000 on a credit control person because he didn’t want to add to his overheads. When he finally relented, the credit controller reduced outstanding debts by almost £400,000 in their first four weeks, eliminating the company’s cash flow issues.

The sole director of a high-growth services business was being overwhelmed with demands on his time resulting in missed meetings and half completed jobs. After a lot of pressing, he reluctantly agreed to hire a personal assistant. His assistant’s organisational skills transformed his ability to perform by managing demands on his time and controlling his diary. He no longer misses meetings or deadlines.

So, don’t be too afraid to try. Sometimes even the best thought out investments fail, but that doesn’t mean you should stop investing. I do realise the difficulty in saying to someone that they haven’t worked out for you, but hiring people is never perfect and the risk of failure isn’t a good enough reason not to hire at all.

This post was originally published in Businesszone.co.uk in July 2016.

What Mike Ashley Has Taught us About High Growth Businesses

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 21 Jun 2016 15:02:00 +0000

Introduction

Successfully managing high growth is hard. We got an insight of just how hard, with recent revelations about Sports Direct from its owner Mike Ashley. Although the sceptical amongst us might consider some of his statements as a bit of window dressing. There is no doubt that recent events have brought into sharp focus just what can happen in a business when High Growth becomes “too much growth”.

Successful High Growth is not merely about growing your customers, but rather being able to deliver the sales that you have won. For many tech companies, it's relatively easy, it simply requires more hardware to support scale. For a more traditional business, things are a bit more complicated. In Sports Directs case it’s about mobilising the supply chain so that when someone buys online, the product can be delivered, which assumes it’s in stock, which means it’s been ordered from the manufacturer, typically in the far east, in time to meet demand. It also assumes that there are sufficient people in the right place to make this happen.

Culture

You’ll recall a number of statements by Ashley to the MP’s select committee about his shock over some of the working practices and the “Culture of Fear”. This rather indicates that the Culture in Sports Direct had gone bad. This is probably because the business had grown so fast that new employees did not buy into the existing company culture and allowing an aberrant form of the Culture to grow.

This happens because the people who perpetuate and enforce cultural norms are the lowest level of management. It is they who come face to face with new employees and will have to explain why things are done the way they are. It also requires support from the company leadership to underline the importance of the company’s cultural norms. When these “custodians of the culture” become overwhelmed with new employees the existing culture breaks down. What rises in its place is a culture driven not by company values, but rather by the force of individual personality.

How easily this happened depends on the strength of the company’s culture in the first place. If it’s not very strong, then you’re pushing at an open door.

Process

Processes like culture can also break down under the strains of growth. In fact, successful businesses are constantly reviewing processes to maximise performance.

It seems that this idea has been lost on Sports Direct and their processes were not fit for purpose. To be fair some of this is simply a result of just how successful Sports Direct can be. You might recall Ashley saying that on some sunny days, demand can increase by 25%. That puts tremendous pressure on the business to perform. The problem for the company is that it has not separated human processes from fulfilment processes, it has simply failed to recognise that people perform better in a positive environment, bullying and intimidation only work up to a point, but in the longer term people just do enough to get by; meaning that productivity remains stubbornly low. You’ve got to ask yourself how productive some can be when they reach full term of their pregnancy.

What seems clear is that insufficient time has been spent on making these processes perform.

Leadership

Mike Ashley talked about the business outgrowing him. The more sceptical amongst you might see this as a way of mitigating his failure to lead. The leadership of Sports Direct have been simply unable to get back control of the business. The failures highlighted in their distribution warehouse demonstrate that the Leadership team we unaware of what was going. Now, whilst I accept that in a big organisation, problems like this can arise, what is clear is that this has been a long-term issue and signals a clear failure in leadership. So Mike Ashley might be speaking the truth when he says the business has outgrown him.

Conclusions

What are the key lessons we can draw from this sorry state of affairs? For a start, never underestimate the negative effect that bad culture has on your business performance. The stronger your Culture, then the faster you can grow without an unacceptable dilution of your cultural values. Culture starts from the top everyone takes their cue from those more senior to them. If you as a Leadership team don’t overtly support and maintain your cultural values then don’t expect your staff to act any differently.

If you are building your business; growth will start to undermine your processes. Making time to keep them as efficient as possible will put less stress on your people and enable you to continue to growth efficiently and profitably.

Understand how susceptible your business is to the pressures of growth. The more you are people dependent in delivering increased sales the more challenging the high growth environment becomes.

Managing a growing business is hard. The entrepreneurial skills you need to create a high growth start-up, are completely different to the management skills you need to run a large corporation. You can see this by looking at just how few individuals manage to achieve this transition.

It’s no failure to recognise that you need to bring in business management expertise to take you forward. Sadly, it has needed some public humiliation for Mike Ashley to recognise this fact, and it’s not something you want to have to go through to reach the same conclusion.

So you think you're in trouble: What Do High Growth Businesses Do Differently?

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 26 Apr 2016 14:30:00 +0000

So you think you're in trouble: What Do High Growth Businesses Do Differently?: Over the past 5 years the importance of the “High Growth Business” and how this relatively small group of businesses disproportionally impa...

What Do High Growth Businesses Do Differently?

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 25 Apr 2016 14:20:00 +0000

Over the past 5 years the importance of the “High Growth Business” and how this relatively small group of businesses disproportionally impacts our economy, has become widely recognised. Firstly, let’s just clarify what we mean by a High Growth Business. The generally accepted definition is a business that is growing at a minimum of 20% per annum with a turnover of at least £500,000.

The now defunct, Government supported GrowthAccelerator service, recognised the importance of this group and provided financial support to stimulate further growth through business advice and leadership & management training.

Despite its importance, there is very little empirical evidence on what businesses do that is likely to make them a candidate for high growth and how they maintain a high growth state.

However, a report published in the USA by Hinge Marketing as recently as February this year, at last, gives us some empirical insight into the workings of these businesses. It looks only at service businesses, but the results are from a sample of over 500 firms.

I don’t propose to give a blow by blow account of the report but rather pick out some of the more interesting findings. There is a link at the end of this article for those who want to read the report in full detail.

One of the most surprising findings was that High Growth Businesses were 45% more profitable than their no growth counterparts. Put another way, High Growth Businesses in this sample had an average profitability of 19.9% compared to 13.7% for No Growth Businesses.

This finding seems to defy gravity as conventional thinking tends to suggest that in the high growth phase, businesses substitute top line growth (turnover) for bottom line growth (profit). The report itself doesn’t analyse why but having thought about it a bit, I’ve a couple of suggestions.

Firstly, High Growth Businesses tend to be better run. In order to sustain high growth, the leadership team needs to have a detailed understanding of how different aspects of the business interact. That tends to mean that they are more efficient as a business including delivery and managing creditors. On the other hand, I know from personal experience that many High Growth Businesses can also be rather chaotically run and certainly aren’t then efficient.

Secondly, could be the adoption of technology. By employing technology appropriately, you can substitute new recruits for capital investment. This means that you can reduce the level of recruitment for any given level of growth. In my experience it is the need to recruit, and recruit heavily, that impacts profitability because it often takes several months for new starters to add value to the business.

I don’t have a clear answer as yet but do hope it’s something that is followed up in a later survey.

The survey also looked at how firms differentiated themselves: this also generated some startling differences.

In response to the question “What are your five most favoured differentiators?”

High Growth Businesses listed;

Our marketing/ business development approach

Our culture

Our business model

Our use of technology

The quality of our people

No Growth Businesses listed;

Our commitment to results

Where we are located

Awards we’ve received

Our reputation

The specialised services we offer

What is blindingly obvious is that these two groups focus on completely different things and if you wish to embrace high growth there may need to be some significant shifts in your way of thinking.

Let’s now turn our attention to how the two groups approach marketing. The survey uses the idea of Total Marketing Effort, which represents an approximation of the sum of explicit marketing costs and implicit costs such as time or diversion of expertise. The rationale behind this is that no marketing is free because marketing time often competes with billable time.

In respect of total marketing effort, High Growth Businesses investment are slightly less than No Growth Businesses at 55.7% to 58.8% respectively. This may also be somewhat of a surprise as I suspect many would expect High Growth Businesses to be spending a lot more on Marketing.

Logically then in order for this to be true, High Growth Businesses must have much more effective marketing. I think this goes back to a point I raised earlier that because they have a much better understanding of their business they get more “bang for their buck” out of each pound of investment than their No Growth counterparts.

What is more, High Growth Businesses invest their spend very differently. High Growth Businesses spend much more on digital marketing. Comparing these two groups again, High Growth Businesses only spend 40% of their marketing effort on traditional marketing compared to over 50% by No Growth Businesses. By contrast, High Growth Businesses are much more heavily invested in digital marketing, where they spend 60% of their effort.

Also, as you might expect because they are more rigorous in measure relevant metrics than traditional businesses. Typically High Growth Businesses monitor at least 4 separate metrics where No Growth Businesses monitor just over 3. This might be for two reasons, firstly, digital marketing is easier to track, therefore building reliable metrics is simpler. Secondly, though perhaps a more circular argument, is that they run their business more effectively which means they’d rather spend their marketing investment where they can monitor its performance which would bias them towards digital marketing.

So what are the takeaways from this survey?

If you want to have a successful High Growth Business, then you need to take a holistic approach and look at how your business can best deliver what you are selling. The idea that culture and people can be a compelling differentiator at the strategic level might be a surprise. However, if you look at many of the highly successful businesses of the recent past, these two components have been key attributes to their success.

Marketing isn’t just about spend, it’s also about finding the right techniques to use. Currently digital marking is delivering a better ROI, however, that might just be because traditional marketing is harder to measure, not that it’s less effective.

We are a specialist High Growth consultancy. Using our Seven Steps programme we can help you set your business for long term High Growth. For further information please go here

This article was originally published on BusinessZone.co.uk

For a full copy of this survey go to Hinge Marketing

Staying Ahead of the Hammer - How to Build and Manage Your Business to Achieve Long-Term High Growth

noreply@blogger.com (laurence@exigent-uk.com) — Wed, 25 Nov 2015 06:17:00 +0000

The challenge for high growth companies is how to sustain growth. It's a sad fact that 40% of companies that experience high growth go through a period of contraction immediately afterwards. The issue for High Growth businesses is often not only how to develop sales but more importantly, how to deliver against the increased sales that they've made. Put another way the growth of the organisation to deliver increased sales has fallen behind the rate of growth of sales themselves. This simple imbalance almost inevitably results in a hard landing for the business.

Over the last 5 years, we have developed a model to help High Growth businesses meet this challenge. We call it Staying Ahead of the Hammer. It's based around seven key elements that help business owners understand and prepare for coordinated organisational growth.

Our experience using GrowthAccelerator clients as well as other high growth clients have delivered an average growth rate of nearly 50% with profit growth of 46%. The real value of our approach is to enable sustainability of high growth.

Our approach is based on seven areas. The Keystone is helping businesses develop a Vision for their business. “A vision provides the reason why you are in business and as a decisive leader gives you the direction around which to enthuse your team and your customers.”. Next we get owners to look at the Culture of their business to see if it supports or hinders a high growth environment and the level of employee engagement.

Having looked at what I would call the infrastructure of the business we turn our attention to Strategy and Planning. This section helps Leadership teams build a strategy and just as important develop a process to implement it. “In a High Growth Business you have little time to ponder about what might be happening in your business. Having a clear strategy and an implementation plan gives you detailed landmarks which will quickly identify when things are off course.”

The following four areas the first is Talent Management: “People are a business’s most important asset and recruiting the right people is fundamental to its success. Existing staff will fall into two categories; those who can grow with the business and those who can't. Knowing how to get the most out of these two sets of people is key to any long-term success.”

We move on to Financial Management and Control: “Accurate and timely financial information which goes beyond the basic P&L and Balance Sheet is necessary to enable the owner or his management team to identify issues early enough to take the necessary corrective action.” Decent financial understanding of the business mechanics is a very common weakness in high growth businesses. We help businesses understand that you can't have too much financial information about your business. This is because you often confront problems where you have no information on which to make a decision. In such circumstances, it's almost impossible to make the best choice. We also use this mechanism to help businesses understand the need to look forward as far into the future as they can in order to identify potential issues before the become major problems.

Our penultimate section is on Organisational Efficiency as “There is nothing customers and suppliers hate more than inconsistency in their dealings with a company. The value of processes is that they bring that consistency to the vast majority of interactions and at the same time deliver a framework for increasing company productivity.” We also introduce the idea that businesses should be output driven (KPI's) rather than input driven undirected hard work.

The last area we look at is Business Development. This often because getting sales is the least of the businesses problems. What they do lack is understanding how to reliably forecast sales as “Accuracy in forecasting sales and, therefore, income, is vital to drive the cash flow needed to support a High Growth Business”

The model itself has the flexibility to allow businesses enter at different points depending on what is causing them most pain. Inevitably they will have to come back to the Vision element and work back through the model.

This has been turned into a book which is released on 27th November. It is one of the few comprehensive books on high growth and what it takes to maintain growth over a number of years. Balancing these several elements is what makes this process such a challenge.

For those of you who are interested you can get the book at Staying Ahead of the Hammer .

I look forward to hearing your comments

Are You Squeezing the Lemon?

noreply@blogger.com (laurence@exigent-uk.com) — Wed, 06 May 2015 11:01:00 +0000

I've seen in recent weeks a whole raft of articles and blogs about the need to grow your business and how you can grow sales by using various channels from Facebook to plain old cold calling. As usual this is the easy target because most businesses have a need to get more sales.

I thought therefore it would be interesting to focus on a different area of the business and one which can just as easily wipe out your profits as a lack of sales. That is your the processes you use to deliver what you sell and collect money from your customers. I call it squeezing the lemon because in or to help maximise your profits you need to squeeze every once of efficiency and productivity out of you delivery systems.

The problem is often that this is the part of business operations that is often overlooked. As is collection of money. In a recession we all say that cash is kind, but its no different now that things have improved. Almost invariably as sales improve the focus moves away from collecting the money. This is the equivalent of restricting the supply of oxygen to a mountain climber. Yes they might manage to go on but it just makes it a lot harder, and is so unnecessary.

The most obvious measure is your debtor days which is simply the amount of money currently outstanding divided by your current turnover times 365. Your objective then is to keep your debtors days don as low as possible. This keeps cash regularly flowing back into your business and will support further growth.

Squeezing the Lemon isn't just about cash but your whole production and sales support processes.
For example, its making sure that you keep your product delivery times the same, and that you don't allow your quality to be compromised. Or that you have sufficient resources to deliver the same or better quality of proposals to the increased enquiries from customers and prospects.

How might you do this? I know a number of accountants have an ability to benchmark your business against similar organisations in your industry. This will give you a broad areas where you over or under perform your industry average. If you accountant can't help you then its up to you to start finding out how your business is performing. You can do this by setting clear targets, often called KPI's, about the expected performance of parts of your business. I would suggest that you should be setting KPI's for your business anyway.
This could be as simple as:
The average response time for a query into the business.
The average time to produce proposals.
The target time to produce a sub-component.
The target for the percentage of goods delivered on time
The target for the level of customer experience

The key point here is not to take your eye off doing the basics properly and as efficiently as possible. Even a small, 5%, fall off in performance in a couple of areas can have a material impact on your bottom line.

For example, I worked in an automotive business and we had regular quarterly meeting to`see if we could reduce the time taken to produce our 10 biggest sellers. We were often able to save 1% in time by making changes to how we manufactured the components. That's 4% per year, but measured over 10's of thousands of items it has a big impact and can often be the difference between making a loss and making a profit.

The thing about Squeezing the Lemon is that you are constantly looking for improvements in performance to minimise the your costs of production. Normally we all focus on this in a downturn because with lower sales we must reduce costs. By contrast, as soon as sales rise we have a tendency to put efficiency on the back burner. Surely it makes sense to keep squeezing the lemon even when sales are up.

If you haven't been to my blog before you might want to subscribe to my feed

Exigent Consulting provides specialist services for Managing High Growth, Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business.

Driving Change

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 17 Feb 2015 17:48:00 +0000

As a business leader it is always your responsibility to make sure things happen. When its in the companies and therefore the individual's comfort zone thats pretty easy. Often all it needs is a light hand on the tiller to make sure actions get completed on time.

When it comes to change in the business or the push for further growth then the situation requires a much more robust approach. One of they key messages here is that you set the standard. As the leader, whether you're a unit head or CEO everybody including your leadership team will take their cue from you. So if you are less committed to an outcome than your leadership team members they will default to your position.

English: Change Management's Approval flow Italiano: Change Management, flusso della fase di approvazione (Photo credit: Wikipedia)

To effect change in your business you have to demonstrate you are totally committed. This means that you have to be an extrovert in your commitment to the new position whatever kind of change that might be. The more obvious your commitment, more likely you'll succeed. Whilst this public relations initiative is important, commitment alone wont get the job done. People are creatures of habit and change is unnerving, if you want to see this in action, next time you're at a conference, when you come back from a break sit where another person has sat and just see the looks or comments you get. I see it regularly where neighbours with only "on street parking" start to argue if other people park in "their space". The bigger the change the more people will resist. To succeed in this endeavour you need a clear process to follow to maximise your chances of success.

Step 1 Do a plan of the change process.

Plan where you are going and what changes in business practises will be necessary to get you there. As part of that process you will need to identify what you are going to do differently and how that will change what gets measured. This part is particularly important as it will be these changes in your priorities which will be the source of most concern to your people.

Step 2 Be the First to Commit

You must be the first to commit to the changes. Having identified your new KPI's(key performance indicators) start asking for information that supports your new commitment get people used to the fact that you've changed.

Step 3 Involve Your Leadership Team

(Photo credit: Wikipedia)

This is a two part process, firstly get them together and a group and discuss your plan for change. Take feedback from the group obtain their buy-in for the change process. The second part is to meet each of your leadership team individually and discuss their own commitment to change and re affirm individual buy-in and agree how they will roll it out in their area of responsibility.

Step 4 Set up regular reviews

Use them to discuss progress and address issues where individuals commitment needs to improve. Identify the change blockers within your organisation, and set a course to neutralise them.

Step 5 Drive Change Down Through Your Business

Get your leadership team to adopt a similar approach with their own team, as you have to the leadership team.

This much more likely to deliver a successful change programme as it is driven down through the business. Regular reviews will identify issues which can be considered and the appropriate solution implemented.

If you need to achieve significant or rapid change its a good idea to do this through small multiple steps. You see once people make one change, the next becomes easier, the third easier still and suddenly change becomes the new norm.

To illustrate this let me recount how this was illustrated in a recent workshop I attended. Complete strangers were paired up and the rules were simple, take in turn to make one change about your appearance, the other person then had to identify what the change was. So one person would turn their back whilst the other made a change. Initially the changes were subtle and slow as peoples natural caution to change manifested itself, it was often something like a slight adjustment of a tie or removal of glasses. By the 5th round they were rapid and even outlandish, with jackets, shoes and even shirts were being removed; people had very quickly got comfortable with change.

Change still requires significant effort but the more frequently you pursue it the easier it gets.

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Is This the Worlds Worst Sales Qualification Question?

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 15 Dec 2014 16:48:00 +0000

Over recent weeks I've seen many businesses fall into this trap and rely on what I think is the world worst sales qualification question. It seems to be especially prevalent in micro businesses and in the creative industries.

In my opinion sales qualification is one of the most important aspects of closing sales. Unfortunately these days most experts seem to concentrate on closing, however proper sales qualification makes sales closing easier. Good sales qualification will help you identify early in the sales cycle those prospects most likely to commit to buy from you, and at the same time help you shorten the sales cycle. Something that we all want. Poor sales qualification, by contrast, results in the opposite leading to a lot of wasted effort and fewer sales.

Priit Narusk in the qualification for the Tour de Ski in Prague. (Photo credit: Wikipedia)

As we come out of our sluggish economy the number of sales opportunities increases as potential buyers prepare to invest. As providers of products and services we enjoy more sales conversations unfortunately this new found wealth of prospects is ruined by one single question which kills time and is our own work creation scheme. On the face of it this question seems quite sensible and for the inexperienced sales person a good one. Nothing can be further from the truth.

The culprit for this colossal waste of time the question "Can I write you a proposal".

Why? The answer to this question is almost invariably "yes" so off you go thinking that you’ve progressed the sale because they want you to write a proposal. In reality you've done no such thing. Ask anyone if you can write them a proposal, ask your mates, your competition even the bloke on the corner, they'll all say yes because that question means nothing. Knock yourself out, write me a proposal, in fact send me three because that question commits me to absolutely nothing but creates a whole lot of work for you. What you have really asked me for is my permission to let you rush off and write something, so why I shouldn’t say yes? It has not tested in any way at all, my desire to purchase from you.

The result from his single question is many fruitless hours putting together proposals in which your potential buyers have absolutely Zero interest. That's why its such a poor question.

If you can't resist asking this question, then at least have a good follow up question. This follow up question will help you stop becoming a work creation scheme. It goes like this "Thanks for allowing me to provide you with a proposal, can we arrange a short meeting in a couple weeks time to review it"? If and only if they agree to that meeting is it worth your while writing them a proposal.

The next time you are tempted to ask a prospect "Can I write you a proposal?" remember on its own it’s probably the worlds’ worst sales qualification question. So don't waste your or your sales teams’ time pointlessly knocking out proposals, get a commitment from your prospect first.

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Comparing the Performance of Linked In and Twitter Ads

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 22 Sep 2014 10:48:00 +0000

I want to say from the start that I'm no SEO specialist or Social Media Guru. I'm a business consultant specialising in supporting High Growth Businesses. I am a bit of a pioneer, joined Twitter in Dec 2008 and Linked In even earlier I cant remember exactly but it seems like I've been on it forever. So I do like to try out new ideas to see how they might help me develop my business by getting more leads or by helping improve my service to my clients.

The Test

I have just started with a new piece of coach management software from Adeptio and whilst talking with them we decided to set up a campaign to get new inbound leads. I already had some content on sales and business forecasting and we decided to use the idea of promoting a free e-book or report as a way of identifying potentially interested parties, you can click on the link to see the landing page. Initially we set up a single campaign with Linked In. Unfortunately that bombed, so I dusted myself down and decided to take it a bit more seriously and create two more targeted ads for Linked In and an advert in Twitter. They were both essentially the same advert they both went to identical landing pages although they were separate URL's so we could identify the source of conversions.

Creating a Linked In Advert

You have space for an image and and advert with 25 character headline and a 75 character body. So it looks like this

I undertook two campaigns one for Accountants and one for IT community. For each campaign we produced a number of ad variants to try to find which was the most successful. We had at least 5 variants in each campaign. There are a wide variety of criteria you can use to target you ads including age, geography, job title, industry, individual company name and Linked In Group Name to mention a few.

Creating a Twitter Advert

The twitter interface is much different with a 140 characters for a tweet, an image, a URL and a limited selection of calls to action. You can chose by location as they call it , language, category, device and gender. The twitter advert looks like this.

What I Have Learned

LinkedIn have a great deal more variables to play with which gives you a lot of options but makes it much more time consuming to create an advert. The ability to target groups is helpful but you need to have a good knowledge of which groups are appropriate to your marketing. This means spending a deal of time researching potentially relevant groups. Just using keywords to find them hasn't, for me, delivered the desired results. Also I've found the limitations of 75 characters in the descriptor section as very restrictive and in many cases I was 2-5 characters over. I struggled to communicate what I wanted in such a small space.

Your advert needs to perform immediately. LinkedIn serves up your advert a lot initially but if it fails to make an impact it will serve it up less and less so you get less response creating a bit of a self fulfilling prophecy. You can see below how Linked In reduces the amount of impressions pretty rapidly making it difficult if not impossible for a slow burn to succeed because its simply not shown.

Twitter by contrast takes a different view and will persist with impressions allowing your Ad to build momentum.

And engagements have risen accordingly.

To create or maintain a campaigns success in LI there is a lot of tinkering about with the variables to try to improve performance. For businesses without a dedicated marketing person it is a significant issue. As LinkedIn effectively kills off slow campaigns and rather than keep tinkering it's better to cancel the original campaign and start a new one. This creates even more of an overhead. The value in having more than 1 advert is you can quickly see which are the most effective and shut down those that aren't so you don't waste valuable impressions.

Twitter has a much simpler user interface but if you're outside the USA then effectively you've only got a country based selection since other than London it didn't recognise any other UK city. The image was also a bit of a problem as it needs to be 800 x 320 minimum which is pretty big most of my pictures weren't the right size. It's also one reason why I ended up with only 1 Twitter advert.

Results

In a nutshell, LinkedIn has not been a success both in terms of click throughs' themselves and the amount of effort required to keep adjusting components to a campaign going. At this point it's in danger of being put into the "too hard" basket.

Twitter, well I'm much happier with the results. After a shaky start the advert has started to perform, this won't happen with LI as anything that does have immediate impact gets killed off through an ever decreasing daily impression count. The click through rate isn't fantastic by any means but it's certainly good enough for me to continue with it. In addition I get a number of side benefits from the Twitter campaign like retweets, and building engaged followers. Engagements is a much broader category and doesn't just refer to campaign click throughs' to my landing page to quote Twitter it includes " ... clicks to links, the Website Card, favorites, hashtags, embedded media, your profile and other Tweet details in your ad. This includes clicks you are not billed for."

I do recognise that this is not a scientific comparison but I do reflect a typical smaller business who may want to use paid promotion to create leads for their business. I think therefore that my findings may offer useful pointers to others who are looking to do the same.

So I'm definitely going to continue with Twitter. As for linked In I'll continue to persevere to see if I can find a better way of creating ads.

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The High Growth Challenge: Are You Winning on the Cultural Battleground?

noreply@blogger.com (laurence@exigent-uk.com) — Thu, 21 Aug 2014 16:55:00 +0000

Every business has a cultural battleground, for most the battle is little more than a skirmish. Even that, for many businesses, is something they struggle to win. For High Growth Businesses, winning on the cultural battleground is vital to their survival.

Are You Winning on the Cultural Battleground? (Photo credit: Wikipedia)

The first question you're probably asking is "where is the cultural battleground?". The answer is anywhere a new recruit comes into contact with your company. So in a small start up it is most likely to be the founders of the business. For a larger company it would most likely be their direct reports and for a business that is bigger still it will be the next level down. In general, it tends to be at the lowest levels of the company hierarchy where most interactions take place. The cultural battleground is where new recruits come up against your company culture and will try to add their own influence the intensity of the skirmish will be based on their own history and closeness to your business's culture. The further away the recruits culture from yours the more intense the skirmish.

For the business, winning on this battleground is vital, after all if it cannot integrate new staff into its existing culture readily, then individual skirmishes will persist and the existing staff will become battle weary and be even less effective in protecting your culture. More importantly for a High Growth Business, at some point this new recruit will become the company's face for other new recruits, who will want to push their own cultural norms. It is easy to see on this basis, how quickly a company's culture can be undermined and changed. Very often this can happen without the senior management being aware of the issue. It will only become apparent as they see employees become less committed not only to the company's values but also those processes put in place to make sure the culture remains embedded in the business.

So far we have only looked at this issue on an individual basis, now let's imagine the problem from the aspect of numbers. For example, over the next 18 months you expect to grow from 32 to 44 people. That assumes a growth rate of a little over 20% per annum. It involves taking on 12 people at a rate of 1 person every 6 weeks over 18 months.

This strategy carries a risk to your current culture and customer experience; unless you can convert your new recruits to buy into your culture quickly enough, to prevent them from being polluted by other new recruits. So in this case time is of the essence. Using our previous example, if it takes you 18 months to integrate a new recruit, you'll have a business with potentially up to 12 heretics in a group of 44 as none will have yet been integrated. Under those circumstances it would be almost impossible to preserve your cultural values and you'd certainly lose the cultural battle. However, if you can integrate your new recruits in say 6 months then you'll only have 4 heretics in a group of 44, that's a much more manageable number. Better still with the short integration time certainly 1 and possibly 2 of those five will be very close to integration giving you a great chance of winning on the cultural battleground.

As a High Growth Business it may be that you will be taking on new people about every month for the foreseeable future. Then this becomes a real concerted and incessant battle. No doubt your success has in part been achieved by the application of your cultural values and you’ll want to protect them to ensure your continued success, then winning on this battleground is a matter of survival. In which case to support your side you need to provide your “troops” with the best equipment. That will include:

1) A clear and strong recruitment process that seeks to take on only the best talent with the best cultural fit.

2) A comprehensive operations document which describes in detail “the way we do things here” and is what I call "The Big Colouring Book" of your business.

3) A well thought out and considered statement on your cultural values. Or what might be described as “why we do things the way we do things here”.

4) An induction and integration process which enables new recruits to understand “the why” thereby making it easier to accept “the how”.

The better prepared and supported your troops the more new recruits you can manage. If you get this right you can cope with almost any number of new recruits. I can give you two examples based on my own experience:

1) A company with a planned growth of 7 new starters per month for a year with a starting number of 120.

2) A subsidiary which, on the back of a big contact win, grew from 28 to 81 staff in a little over 10 months.

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How a Strong Culture Improves Your ROI with New Recruits

noreply@blogger.com (laurence@exigent-uk.com) — Fri, 18 Jul 2014 16:04:00 +0000

How Strong Is Your Business Culture?

Over the last couple of weeks I've had a number of discussions about how to integrate new people into a business, or "onboarding" as the Americans term it. Where discussions got interesting was how a business’s culture or lack of it, influenced the speed with which new staff became integrated.

So how does culture influence post recruitment integration and what else if anything will have an impact? My experience with high performing businesses has confirmed the importance of culture in the process. The reason for this is that taking on new staff can be seen as the key battleground between the existing culture of the business and the culture of the new hire. The stronger the business culture then the more influence it will have and either the new hire will integrate quickly or leave. Those with a strong culture will quickly show new starters that they will not be able to change or modify the culture. This can be seen most obviously in the military where new recruits have no input at all and must submit completely to the prevailing culture.

Those, however, with a weaker cultural tradition will have greater difficulties in getting new hires to conform, resulting in increased costs of integration and greater disruption to the business as new hires continue to argue their corner. This is because those businesses with a weaker cultural tradition will have greater difficulty in persuading a new hire to conform to the way they do things, mainly because they don’t have clear processes or a strong philosophical underpinning as to why things are done in a particular way. Faced with inconsistencies and often contradictory assertions of the recruiting business a new hire with a strong personality may be able to readily persuade existing staff members that they have a better way. This state of affairs can easily upset existing settled staff who were happily doing things the “old way”.

Nevertheless, culture on its own will not do the job, although it helps by clarifying your approach. Just as important, however, is having a good description of not only "why we do the things this way" but also "how we do things here". I describe it as the big colouring book for your business. You might call it an operations manual or a knowledge bank. Whatever you call it having a written process is infinitely better than a verbal explanation.

There are two key reasons for this, first people tend to argue less if something is written down. It gives the words a level of gravitas that is seldom achieved with the spoken word. Second, is it allows the new staff member to try things out without the same high level of reliance on, interaction with, and consequent disruption of existing staff when you are reliant on verbal communication.

If, therefore, you are embarking on, or are indeed in, a period of high growth the strength of your cultural values and your ability to create a written operational manual will be significant factors in integration of new people and therefore your ability to maintain your growth.

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How Sub Contractors Can Steal Your Profit

noreply@blogger.com (laurence@exigent-uk.com) — Fri, 06 Jun 2014 18:31:00 +0000

Its very common these days to sub contract some services on the grounds that it frees your time and enables you concentrate on developing your business. Whilst this is true and often very helpful, one should always "do the maths" to see if the extra time and convenience is not outweighed by the transfer of your profits to the subcontractor.

Here are three examples from three different businesses that illustrate this issue nicely.

Case 1 A business outsources some key components of a contract resulting in the subcontractor billing an amount equal to 50% of the subcontracting company's total monthly turnover for three consecutive months. The results for the period were, turnover up by 50% but profit down by 98%.

Case 2 A services business employed a team of subcontractors to undertake some high level consultancy. This was a 6 month contract which made a respectable £282,000 profit. Employing equivalent staff for the same contract, however, would have delivered a profit of £452,000

Case 3 A construction business hired a subcontractor with specialist machinery at £1900 per day. Purchasing the same machinery under finance would cost £1300 per month.

In my experience in dealing with high growth companies these situations are by no means exceptional and illustrate nicely the risks of subcontracting without "doing the maths". Why do these situations arise? There seems to be two main answers firstly the subcontracting business doesn't understand the financial implications of its decisions. Secondly and perhaps more surprising is the worry about the financial commitment of taking on extra people.

Understanding the financial situation is of course "doing the maths". Often this is no more complicated that calculating the cost of subcontracting against the cost of doing it yourself. The problem for many is they don't have any current financial information on their business. Consequently decisions are driven by the need to find resources without looking at the longer term implications. "Doing the maths" should indicate when it becomes more profitable to do it yourself. This cross over point is often sooner than one might think; for example in case 3 if the business could use that subcontracted machinery for as little as three days per month it becomes cheaper to employ a person and buy (on finance) the machinery rather than subcontract.

The inertia around taking on staff is an altogether more significant. A lot of this is to do with peoples expectations of the future and for the past few years its been rather cautious if not pessimistic. Despite clear signs that we are emerging from the economic doldrums many business owners hold very conservative views about the future. Consequently they are very reluctant to take on more staff. Part of this is because they don't have a clear view of the future trends and demand and what that means for their business.

Those business owners who have processes and systems in place to peer into the fog of the future will gain extra advantage over their competition because they will able to access information which will give the insight into what is going to happen in the future and have more confidence in the benefits of recruiting additional staff.

For the rest the convenience of and inertia of moving employing subcontractors will provide them with the illusion of additional flexibility whilst exporting the potential profit of additional work from themselves to their sub contractors.

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Exigent Consulting provides specialist services to the Small and Medium Business including Managing High Growth, Business Turnaround, and Mentoring. We help business owners improve the profit performance of their business.

Does Spending More On Marketing Equal More Success ?

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 12 May 2014 16:02:00 +0000

There is no doubt that many surveys show that an increase in marketing spend leads to an increase in growth. However there seems to be only a limited correlation. Take this statistic for example; if we compare at High Growth businesses (defined as growing at 20%+pa for 2 years or more) with average growth companies we get a radically different picture. The figures collated from a recent survey on High Growth businesses by Hinge Marketing is that an average business, that is one that grows at less than 20% per annum, spends about 5.1% of its turnover on marketing. At the top end of average businesses marketing spend can be as much as 12% of sales. The average of the high growth firms surveyed showed their average spend was 4.9% of sales. Slightly lower than the median for the average business! A bit of a surprise given that they are growing up to 5 times faster than the top spenders of the average business and spending much less on marketing.

That leads to the obvious question. Why? In short its to do with how High Growth businesses address their market. For one thing they are much more focused on meeting clients needs than the average business. For another they have a much clearer understanding of who they were selling to and what their needs are. Basically these high growth businesses have recognised more than the average business, that their clients and prospects are only interested in themselves and concentrated on answering two questions:

What problem do I solve for my customer?
Why should my customers buy from me rather than my competitors?

These High Growth businesses seemed to have recognised two things. Firstly that customers are selfish and are really only interested on what suppliers can do to help them overcome their own problems. Secondly High Growth businesses have spent a considerable amount of time and effort answering the question why me?

This really sets them apart. In a recent workshop I asked the 20 or so participants to answer the question “why should my customers buy from me rather than my competitors?” and without exception they all struggled. Some actually admitted they couldn't answer it at all.

This was further demonstrated when the same survey rate the elevator pitch. They asked each CEO to give us their brief elevator pitch. They then rated their response on a 5-point scale based on three criteria:

1) Clarity of the firm’s capabilities and purpose

2) Clarity of the target market

3) Articulation of the firm’s competitive advantage

High Growth businesses scored an average of 72.7%

Average growth businesses scored an average of 45.2%

What this signifies is that successful sales and marketing has more to do with the clarity and uniqueness of your proposition than the size of your wallet.

To get a full copy of the report from Hinge Marketing go here

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What Do High Growth Businesses Do Differently?

noreply@blogger.com (laurence@exigent-uk.com) — Tue, 01 Apr 2014 14:57:00 +0000

That’s a question that most of us find intriguing because we all want to know the secret of success. Many business owners I know, whom others might consider successful, are themselves a little nervous as they don’t really understand why they got to where they are now. Their problem, obviously, is that if they don't understand why they got there in the first place; they won’t know what to do if things go wrong.

You might have noticed that more recently I have been focusing on ambitious business owners that are seeking to rapidly grow their business. These High Growth businesses provide us with some valuable insights about how to be successful. A recent survey of High Growth businesses in the USA by Hinge Marketing concluded that there were 4 things that high growth businesses do differently from others, which contributed to their growth.

1. They focus on delivering client’s desired outcomes. They were not touting the firm’s qualifications or their products or service strengths but rather what the results were of providing their product or services and what it meant to the client. This idea of focusing on outcomes makes them much more likely to deliver as they have their eyes on the prize.

2. They are truly customer focused; their job is to make the client’s life easier. You won’t hear complaints about customer attitude or how clients are making their life difficult. They see a problem with a customer as an opportunity for them to improve. Some businesses are actually disappointed if they don’t get negative feedback from their clients as it doesn't give them the opportunity to further improve their business.

3. They are flexible. They recognise how much, both prospects and clients, value flexibility and very many high growth businesses feature flexibility in their marketing and sales material.

4. They focus on their reputation. They work very hard at promoting and protecting their reputation and their brand.

There is a 5th thing that High Growth businesses do, or rather and interestingly what they don’t do and that is spend excessive amounts on marketing. Surprisingly, High Growth businesses spend slightly less than the average business on marketing. You'd intuitively expect that High Growth businesses (in this case growing @ 20% plus pa over 2 years) would be spending disproportionately more. However the survey indicated that these " High Growth " businesses spent only 4.9% of their revenues on marketing as opposed to 5.1% for the average business.

This leads to the obvious question; how do they do that? Whilst I have no empirical evidence I can anecdotally, at least, support this finding. If I look at those High Growth businesses I've worked with virtually all of them spent much less on marketing than you’d expect. Having looked into this further it seems to me that many High Growth businesses have accidentally locked on to something which fits the market demands better than the competition and the clarity of their proposition has got prospects pounding at their door.

I can think of two obvious examples; one a construction business that is currently experiencing an 80%pa growth over this year and forecasting similar next with no marketing spend at all. In fact they are receiving so many enquiries that they are hard pressed to respond at all. Looking at it for the first time you might even think that their sales process was broken. Yet despite all of that their growth is and continues to be phenomenal. Why, "word of mouth". They will move heaven and earth to get things right first time. This attitude marks them out from their competition and keeps both existing and new customers approaching them for proposals.

The second is a services business which has landed several strategic contracts with some very high profile companies in the UK, with no formal sales function and more startlingly having no one with any formal sales training. Its success once again appears purely based on what it can deliver and “word of mouth” from a couple of existing clients.

What I find interesting is that the results of this report suggest that a business’s success has much more to do with how well they had thought through why and how they deliver their product or service and their value proposition and much less to do with the size of their wallet.

For a full download of the Hinge Marketing report click here.

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Time To Review Your Value Proposition.

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 10 Feb 2014 22:20:00 +0000

We can at last say with some confidence that we are seeing some "green shoots of recovery". Recent figures have indicated an acceleration in growth and this points towards a more buoyant economy. Let's not get carried away as we are still operating at levels below the pre 2008 crash. Nevertheless, the supply side of the economy is optimistic that interest in its products and services and hopefully sales will increase next year, as potential buyers at last dip into their cash hoardings and start investing in their businesses.

A direct consequence of this improvement in sentiment is that many companies will gear up their sales machines in anticipation of improved demand. Collectively that means increased competition for sales.

Also, as buyers start to loosen the purse strings, their years in a very tight market will have changed their perceptions of what is important to them and their expectations of their suppliers and their solutions. This means that your product or service may no longer fit the market as well as it once did. As a result the value you bring to your market may be reduced resulting in a poorer take up of your services and offering your competitors a chance to get ahead.

Identifying your Unique Value Proposition (Photo credit: Intern. Forum Of Visual Practitioners ifvp.org)

New entrants into the market will also be seeking ways to differentiate their product to better reflect buyers changing needs. All these pressures should lead you to the conclusion that you need to review your value. More explicitly you should be reconsidering your value proposition and testing its relevance to a changing market.

Your Value Proposition

Your value proposition is a short statement which explains to your target audience what problem you solve and why they should buy it from you instead of your competition. What is different about your solution or offering compared to your competition. It is sometimes called an elevator pitch or positioning statement. However you want to describe it, now is the time to give it a review.

It's easy to become a little blasé about your value proposition after all you know and love your product. Your target market doesn't have the same attachment and will go after what they want and will not hesitate to ignore you if you no longer meet their needs.

I remember listening to an interview with Jack Nicklaus where he said every year at the beginning of the golf season he would go to his coach and go through the basics of his grip, his stance and his swing in minute detail to make sure that he hadn't picked up any bad habits that might affect his future performance. Taking that analogy forward we should regularly review our value proposition to ensure its relevance.

Your Value Proposition Components

Lets just remind ourselves what should be included in our value proposition.

What is our target market? Has this changed? Is our market bigger or smaller than before?

What is the current problem we are solving for our target market? Is it an important consideration for customers in our market? For those of you who don’t have a formal value proposition, start with the biggest issue customers have with your industry and see if you address this. If your product or solution is less important to your market than previously, then you’ll have a tough time selling it.

What are we offering? Is it a new product or service? Can we explain it easily?

What is different about our solution? At this point many people talk about a unique selling point. For most businesses finding something that is unique is almost impossible. What you want to isolate is what you do differently or what additional capability you have, that will make them buy from you rather than your competition.

Which brings me to the last point what alternatives are there to what you offer? Why is your offering superior to the competitions? What is the Return on Investment from adopting your solution?

By asking yourselves these questions you should get a good understanding of changes in the market and how that might affect your value proposition. You may be affected by such things as changes in legislation, new products entering the market or your industry being more interested in other problems. Unless you answer these questions, you may well find your value proposition increasingly irrelevant at a time when your target market will be more active than it has been for years.

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How Poor Recruitment Kills High Growth

noreply@blogger.com (laurence@exigent-uk.com) — Fri, 06 Dec 2013 17:39:00 +0000

Recruiting is often overlooked as a major limiting factor to sustaining high growth, but it is often at this hurdle that high growth businesses fall over. To meet the growing needs of your business you will have to be successful in recruiting and retaining staff. In order to achieve this you will need to consider two critical factors.

Poor integration of new hires is an unnecessary drag on growth

Firstly, that you have an effective recruitment process and secondly, how quickly you can assimilate new employees into the business.This post recruitment activity is a fundamental driver to sustaining high growth. Get it wrong, or do it poorly and you'll struggle to sustain any sort of growth at all.

This article is not intending to go into detail about the processes you may want to adopt but rather to highlight the implications of getting it wrong. The two issues we're looking at are recruiting the wrong people and the impact of not being able to integrate them into your business, and how these factors if not addressed act as a stall on growth.

The Recruitment Process

Firstly, as the title indicates, you should a have a process. Not a hand crafted set of actions but a repeatable process. This, amongst other things gives you consistency and quality control. When recruiting you should consider two things, how well the candidate will fit into your organisation and their capability or skills to do the job.

I deliberately put fit first; if you are growing fast and taking people on you don't want them to be antagonising the rest of the team, you want them to fit right in. Only after you are confident of their fit should you investigate their capability. Getting fit right first will increase the speed with which they are assimilated into the business, the quicker this happens the more staff you can recruit before they create a drag on your business.

Integrating New Recruits into the Business

Once recruited you should consider how quickly you can integrate this new recruit into your business. I think we would all accept that there is a period after you take on a new employee where they act as a drag on your resources rather than contributing to it. This is normally seen as on the job training. How effective you are in bringing new employees up to speed and integrating them into your business will determine the rate with which you can recruit to support growth. So like recruiting you need a post recruitment integration process

The two key factors in a post recruitment process are training and a culture process, which is about the alignment of values.

If you have no post recruitment process or, more politely, an informal one, it will take you a long time to get returns from your new recruit. Typically you'll see a lot of frustration in the business as the new employee is largely left to their own devices and the necessary training comes in fits and starts with little or no coherence. This makes it more difficult for the new starter to:

1) learn enough about his job to be a net contributor to the business; and

2) integrate into the company, that is absorb and identify with the companies aims and culture.

The consequences are often:

1) the new hire leaves because they've become disillusioned with your company (what a waste of time and effort)

2) your existing staff see taking on new staff as a chore and therefore don't put in the effort they should, often resulting in the new employee becoming disillusioned and leaving.

Even if they stay, the whole process has been unsatisfactory for everybody and will have inevitably consumed more resources that it should and taken much longer that it needed to. In a high growth environment it simply leads to an unacceptable drag on growth.

The culture process or alignment of values is equally, if not more important than the training. It's crucial to get new staff who share the businesses' cultural values.

I'm sure at this point there are some of you are scratching your head at the moment and are saying to themselves but I'm only looking to recruit 1 or 2 people a year; what's the problem? My answer is that whilst the numbers are low a new recruit will most likely be a member of a small team. This is where being a small number works against you. Think of the recruit as a percentage of your workforce; if it's 5 a new recruit represents about 20% and if its 10 its 10%. Now image the damage to your business if 20% of your workforce were not engaged with the business. Worse still, what if that new recruit is actively trying to promote an entirely alien set of values to the rest of your team, think about the disruption then.

To mitigate against this problem your post recruitment process must include an amount of orientation about how you do things in your business and what is and what is not acceptable. It is inevitable that new recruits are going to question what you do and why you do it, either because they are likely to have come from a business that did things differently or because they are interested in how your business does things. Either way you need to have an answer.

At some time you will get a recruitment wrong, however if you don't have a recruitment or integration process you will make more mistakes and have created a lot more unnecessary problems for your business.

If you would like to find out more us and how we can support your business, you can contact us via Exigent Consulting or Managing High Growth, We help business owners improve the profit performance of their business.

The High Growth Challenge

noreply@blogger.com (laurence@exigent-uk.com) — Fri, 08 Nov 2013 16:58:00 +0000

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Growing a business is a challenge in its own right, growing a business in an environment of high growth is doubly difficult. To get an idea of just how difficult that is you only have to look at how few businesses manage to sustain high growth (20%pa) over say 4 years; and what a tiny percentage of those will achieve this state for a decade. So be under no illusion sustaining high growth is a major challenge.

So what makes it so difficult? It is my contention that too many businesses focus on the wrong issue. In any business there are two basic components that need to grow together sales and the organisation. Sales is the easy bit. OK so thats a bit of an oversimplification. Growing sales is tough, how tough, depends to a significant degree on market growth. It is self evident that its harder to achieve high growth in a slow growing or even stagnant market compared to a market which is also in high growth. Some might even say that growing at 35% when your market is growing at 50% is actually under-performing. However too many so called growth experts focus on sales and marketing because thats the key driver. Absolutely true. What sustains high growth, however, is matching organisational growth to support sales growth and thats a whole different order of difficult.

Why is it so difficult? Firstly, because it involves managing multiple disciplines successfully not just one. Further these different functions have to, as far as possible, be kept in balance along the way. In addition the matching of organisation to sales has to be close enough to allow the business to make a profit sufficient to allow it to reinvest in maintaining growth. This is because for the most part businesses have to rely on their own cash generation to fund growth. There businesses that generate extra ordinary growth but this usually only possible because they have access to extra ordinary amounts of cash. Those cases aside it's up to the business owner to fund his own growth.

English: Hammer thrower Mike Mai practices at Fort Lewis, July 1. (Photo credit: Wikipedia)

To illustrate this in a different way, let's use the analogy of a hammer thrower. At its basics you pick up the hammer rotate across the circle and hurl it into the distance. In reality it is a very technically demanding sport. The key to success is to remain in control even though your rotate faster and faster across the circle before launching the hammer into the distance. In order to be successful the hammer thrower needs to stay ahead of the hammer. This means that the hammer stays slightly behind the throwers rotation so that they retain control. If however the hammer gets ahead of the thrower then control switches immediately from the thrower to the hammer as they are in effect being pulled around by the hammer. The result is that the subsequent throw is out of control and either it crashes into the side netting or if by chance it does make the opening it has no great distance or direction. The problem for the hammer thrower is that if the hammer gets ahead of him it is impossible to slow the ball down a little bit to get back in control. Slowing down inevitably results in sufficient loss of momentum for the hammer to just falls to the ground. If we read sales growth for the hammer and organisational growth for the thrower we can see that if organisational growth falls behind sales growth the only way for the position to correct itself is for sales growth to slow. The problem is, that like the hammer falling to the floor, sales growth tends to stall completely.

This common occurrence is evidenced by what I call "shooting star" businesses that shine brightly, for a brief time then disappear. These are businesses that grow very rapidly for a year or so but then the wheels come off management spends the next year to 18 months clearing up the mess. Significantly this experience is so painful that the business often makes a conscious decision to avoid high growth in the future.

Secondly, it requires a very broad range of business knowledge and expertise. Its something that few business owners are aware of, especially in the early stages when often they are struggling to make the mind shift from being an exponent of what they do to being the MD of a business that provides those products or services Even if they are aware of it few business owners have thought about managing the impact of growth or assessing the interconnections between functions which accentuate both good and bad decisions. I've put them into seven areas. They are:

Vision, Culture, Strategy and Planning, Talent Management, Financial Management & Control, Business Processes and Business Development. The first are about leadership and infrastructure. The other 5 look at key business activities but will be much more effective if the infrastructure is in place.

The challenge for a business in maintaining high growth is to grow the organisation consistently over time to match sales. In supporting businesses to understand and undertake this challenge in a knowledgeable way we are much more like to provide sustainable high growth businesses.

Death by Social Media?

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 23 Sep 2013 16:04:00 +0000

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Help I'm going round in circles! I cant stand it. Every week there is a new must have social media platform which claims to: increase my lead generation or destroy the opposition or dominate my niche or explode my sales. (I like this one as in my mind its a bomb going off in my sales sending bit of sales shrapnel everywhere). I'm on so many platforms now that I don't have time to sleep and I'm reduced to a dribbling wreck, so i've had to stop uploading selfies on Flickr, Tumblr, Facebook, Twitter, Pinterest, Instagram...... see what I mean. I just want some LEADS!!! I'm a failure, whats wrong with me?!

Different Ways To Engage Social Media

Not content with the new must haves, there is the recycling of the existing must haves. This month its blogging. A recent Hubspot e-book indicated the following, but it doesn't make sense; they say I can get 67 % more leads to my website if I blog than if I don't. But I don't get any and 67% of nothing is still pathetic. Even better they say if I blog 16-20 times a month I'll get twice the amount of traffic to my website than if I blog 4 times a month or less. Am I bonkers or are they really recommending that I increase my output by 4 times to get 2 times the reward. (Sorry Hubspot I couldn't resist that, but then I'm just jealous that you got over $65 million in VC funding and I cant get 65 quid)

Before that it was LinkedIn "the business network". I've joined 50 groups started my own, involved myself in hundreds of discussions and I still haven't got a descent lead or even the offer of a cup of coffee. Am I the new elephant man? I hope not I've had nice comments about my picture but mostly from women with strange names and even stranger addresses.

Then before that..... you get the picture...

I feel another panic attack coming on I've missed 30 minutes of my twitter stream.

Time to calm down, take some deep breathes and apply a bit on common sense to this.

After all to most of us over 35 social networking is a parallel universe, like I cant understand why my sons text one another or their girl friends whilst they're in he same room. Why cant they just say it? Why would you want to make public intimate details of your life I'm embarrassed just thinking about it let alone sharing it with my followers.

More seriously social media is in danger of taking over our lives, and in parallels with the dot com boom of the 2000's we seem to be failing to apply basic business principles to our activities. As a business user its a marketing channel and has to deliver results. All that "it improves your profile and helps you compete" is just baloney if it doesn't deliver results. Nothing is still nothing how ever fashionable the route.

At its core social media is a conversation it is also a slow burn, just because you have a lot of followers doesn't mean people are reading what you put out. A recent survey on twitter suggested that only 4% of your followers are likely to see a tweet at any one time. So if you have 1000 followers only 40 will read it. This suggests that you need to repeat and vary the same message a number of times across a day to expose it to a significant proportion of your community.

From a marketing perspective you should only use what you are comfortable with. I struggle with Facebook so I don't use it much. I'm happier blogging but I limit myself to 1 to 2 posts a month. More importantly I realise that you don't get instant results. There are always anecdotal stories of people who "won the lottery" and got that big deal almost as soon as they started but for the vast bulk of us it requires persistence and diligence to get results. But lets be sensible if other routes to market are more successful for you, then use them.

So don't be a victim of death by social media. Take control and do what delivers the best results for you. If you don't know what that is just contact me and I'll help you find the best way for you to market your company to the outside world.

Good Culture and Return On Investment

noreply@blogger.com (laurence@exigent-uk.com) — Fri, 06 Sep 2013 18:14:00 +0000

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There has been a lot in the press and blogosphere recently about how its people that matter in providing a competitive advantage to a business. In a recent discussion with a number of high growth companies, whilst there was a general acceptance that people and more specifically Culture mattered; there was a mixture of both skepticism and confusion about how one might quantify the benefits.

Buddhist Flags Tibet

I went away to think about how I could use simple recognisable examples to demonstrate the economic value of "good" culture over a "bad" culture.

Lets take two examples. The first is a company which might be described as having a bad culture or perhaps a culture where the employees don't feel engaged or committed to the business. I expect we can all recognise similar companies.

In this business employees turn up for work between 8 and 9 am but do not voluntarily start their work and continue to read their newspapers or use their smartphones until 9am. During the working day they stick religiously to the rules having 15 mins break in the morning and having their 1 hour lunch break. At the end of the day to make sure they can leave at 5pm exactly, consequently work winds down around 4:45 and everything is put away, necessary ablutions done in time for a mass exit at 5pm.

In the second business where they have a "good" culture staff arrive between 8 and 9am and mostly start their working day when they arrive, whilst everyone takes a lunch break many can be found back at their desks working resulting in them having substantially less than the mandatory hour. When 5pm arrives most of the staff are still working and they gradually drift away from work over the next hour.

So its easy to see that on average people in the company with a "good" culture or where they are engaged with the organisation work longer. For the sake of this example lets assume that on average the "good" culture business get 30 minutes more per day per employee than the business with a "bad" culture. Based on my everyday example I don't think that's an unreasonable estimate to make.

Over a week that's 2.5 hours per employee on the basis that an employee works 46 weeks a year, excluding holiday entitlement and public holidays, that equates to 115 hours per employee per year or if you prefer about 16.5 days.

For a company with 10 employees that's 165 extra free days work or 33 man weeks. That about 3/4 of a full time employee every year for a 50 man company that's 3.5 man years of effort extra.

So what does that mean in financial terms. That's a bit more difficult to quantify because were are going to have to make some assumptions about average pay across the business. Using composite rate of £10 an hour, which I suspect is a little conservative but makes the maths easier, we get an economic benefit of about £1150 per employee per year. For our 10 man company that £11500 per year. For our 50 man company that's £57500 comfortably more than a couple of employees. If we assume the businesses are in aerospace, IT or other high skilled industries the financial benefit increases dramatically because the average hourly rate is probably closer to £25 than £10.

So what have we discovered? Firstly I would say small differences matter 30 minutes a day isn't much spread across employees but it adds up to a significant extra saving and competitive edge. Secondly, in keeping this example as simple as possible we have ignored a number of other benefits including the fact that people work harder and more effectively when they are happy at work. They don't "clock watch", they operate better as a team. All these additional factors increase productivity and performance. They are however very difficult to quantify and certainly not without an organised an scientific study which is way beyond my capabilities.

Nevertheless I think it has been possible to demonstrate clearly that there is a quantifiable benefit to having a "good" culture and even on this anecdotal basis its financial benefits are not to be ignored.

Does Your Website Pass the "I" "We" "You" Test?

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 12 Aug 2013 14:47:00 +0000

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Two-Point Perspective. Write from the readers perspective on your website. (Photo credit: Wikipedia)

As the use of websites to promote our brand and generate leads intensifies too many of us fail a basic but critical test which dramatically impact the performance of our sites.

You will know by now that Google wants everyone to focus on content, yes, that’s the boring bit we have to produce which goes on those lovely well designed web pages we've paid for. For most of us writing copy is not something we do as a profession, but there is something simple we can do which will help us connect with your audience even if we aren’t confident about writing copy.

The most influential is the "I" "we" "you" test. What does that mean? This is simply the number of times you use the terms "I", "we", or "you" on a single page of text. The ideal ratio is 1 "I" "we" to every 6 "you". Sadly for most web sites the ratio is the complete opposite. Why is this important? As a visitor to a site I want to you to be writing from my perspective about thing of interest or benefit to me and about things that might or should be important to me. Its a basic marketing principle that you should always write from the prospective of the reader not the writer. The reason for this is simple when we write from our own perspective we get to focused on what is important to us, which in most cases is not what is important to the reader.

For example writing on your web site “we’ve been established for 25 years and we offer the best in class widget, our quality makes us different” Well lovely, but frankly I’m just not that bothered. However, if you wrote “As a user of widgets you've probably found that the biggest problem is inconsistent quality. So you’ll be looking for a supplier who can give you guarantees about the performance of the widgets you need”. Well you know what; I’m interested.

The two short extracts are talking about the same thing but from a completely different perspectives and it’s the latter which employs “you” that speaks from a potential purchasers perspective which engages the reader, and that is the perspective you must have to get the maximum performance from your site.

Now then why don’t you nip over to your website and see how you fair in the "I" "we" "you" test.

Exigent Consulting provides specialist services for High Growth Businesses, Business Turnaround, and Mentoring to the Small and Medium Business. We help business owners improve the profit performance of their business.

Recruitment is Key to Small Business Success

noreply@blogger.com (laurence@exigent-uk.com) — Mon, 15 Jul 2013 11:34:00 +0000

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Recruitment of new staff is a big investment and full of risks; getting it wrong for any small business and especially for micro businesses, that is less than 10 staff it can be catastrophic. Despite this, for most small businesses the recruitment process, if it exists at all, is chaotic and usually based on he or she was cheap, or they were recommended by a mate I trust. Why do we do this, for the most part its because the business owner has little or no experience of recruitment and there is little trust in recruitment companies or the service they provide.

English: Recruitment Process Map (Photo credit: Wikipedia)

So what can we do to reduce the risks. In preparation for recruitment of a new employee, as the owner of a small business you should have two things; a job description so you know what role they fulfill and a list of competencies that you think the person requires to be good at their job. So for example if you are employing a receptionist, they should be helpful, polite, have easy to read writing for reading notes, and a voice which is easy to understand over the phone.

Armed with this information you now have some criteria you can investigate when interviewing during the recruitment process. I can already hear some of you saying its a receptionist I haven't got time for that. I have two answers firstly, the receptionist will be the first point of contact for your business for your customers and prospects having a receptionist who is short tempered or even rude can have a serious impact on your business. Secondly, if you were spending £14000 and upwards on a machine I'm sure you wouldn't go and pay for it without bothering to check if it could do the job.

The first thing to ask I would suggest, which may come as a surprise to many, is will this person fit into my organisation. Whilst capability and relevant experience is very important making sure they will work well within your small team is very important indeed. Recruitment of a disruptive employee can do a lot of damage to both morale and productivity whilst at the same time take up a lot of management time and it may take several months for the business to recover. As you might expect the smaller the firm the bigger the level of disruption.

Having decided on fit, my second suggestion is that you interview more than one candidate, this at least gives you some context for your decision to recruit. Often I have found that the comparison candidate has turned out to be the best fit for the business.

Thirdly, make sure you ask all the candidates the same key questions during the interview, so you have some consistency in your feedback information and that you take notes so that you can compare the candidates. This is particularly useful. When there is some time between the two meetings. You'll be surprised how unreliable your memory can be especially with details.

Fourthly, do the unexpected during the interview as it helps you get valuable information, for example don't ask the typical questions like "tell me about yourself". Ask instead "what is the one thing you've done to date that you're most proud of or regret the most?" A key characteristic of a good employee is the ability to think "on their feet", you'll find more about a person by throwing a "curve ball" than you will by asking the predictable. I recall one colleague deliberately made the first interview with a potential recruit as chaotic as possible to keep them off balance. I wouldn't necessarily recommend this extreme interview strategy but as a small business going through the motions at interview will increase the likelihood of a poor result.

Lastly and a very common stake made by small business owners, don't take a candidate just because they are the only one you can find. I've heard all sorts of rationalisations from business owners why they should take the person even though they may not be "perfect".

For a high growth business keeping the up quality of your recruits is a vital component of continued success, keeping the quality level high for new employees is a key success criteria. If you can't find what you want, I'm afraid that taking the "next cab off the rank" is rarely a satisfactory solution.

Exploiting Your IP For Commercial Advantage

noreply@blogger.com (laurence@exigent-uk.com) — Thu, 06 Jun 2013 10:44:00 +0000

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There were a couple times over the last week when I have bumped into Intellectual Property (IP), the first was that there are tax breaks if you exploit it and second IP is still hugely valuable even if you cant patent it. Both occasions incidentally were through group discussions on LinkedIn.

Graph showing European patent applications filed and patents granted from 1997 to 2008. (Photo credit: Wikipedia)

My first instance was a post in my own Linked In group about the "Patent Box" which was a UK tax incentive come concession which over the next 5 years will enable businesses to claim corporation tax of 10% for that portion of the business based on patents. I'm a little fuzzy on the detail but true to form there was virtually no publicity around this change in tax breaks which is clearly designed to start to change the culture of British enterprises to recognise the commercial value of IP. If you are a manufacturing, engineering or high tech business, what are you doing to protect your IP? Could you protect your business assets by patenting your new ideas?

Now there is often a basic misunderstanding of what is patentable. It doesn't have to be new, but a idea of a product has to demonstrate that the components have been put together in a novel way to provide a unique solution to a and existing problem or using known components in a way that solves a completely different problem to that originally envisaged.

Image via CrunchBase

Many of you will recall that Apple recently went to court over their patent on the slide control for the iPad and iPhone. Making that control isn't new other than the idea to use it for power up and power off, yet it is patentable.

The importance for a company is that IP offers some protection for their ideas and will stop competitors freely stripping down your product and blatantly copying it. In the longer term having patents will add value to your business enabling you to get a better price on exit that you would without them. The degree of additional value obviously depends on the patents you hold.

Lots of ideas and development of existing products could be protected by patents but the engineering and RandD functions seldom tend to connect the idea with commercial value as innovation is just what they do. As a business owner it is up to you exploit the commercial advantage of holding patents. Yes, there is a cost but a simple ROI analysis will tell if its worth it. Additionally good internal practices can significantly reduce the cost of getting a patent by doing a lot of the basic work before it ever gets to a patent lawyer.

The other area of IP is that which is not patentable but still delivers great commercial advantage. This IP is typically about how we go about performing our business. Its more about ideas and business processes which enables you to be seen to be offering an advantage over your competition.

Going back to my time with Admiral Computing we had IP in our estimating process which enabled us to use metrics to accurately estimate projects and importantly as part of the sales process we would give a detailed copy to the prospect which explained how we had reached our price. We would always say "if you can find a mistake in our estimates we will certainly change them but we consider that this detail will demonstrate why our estimate is what it is".

We were very seldom the cheapest but we were nearly always the only one who could quantify our estimate. This led the customer to understand that our price and certainly our effort was an accurate measure of what was required.

As they had more confidence in our numbers we were selected as a low risk option and in the vast majority of cases they were proved right as we came in on time and to budget.

My experience is that a high proportion of high growth businesses have this kind of IP and find a way to exploit it to their commercial advantage.

If you are the business owner do you know what ideas and processes you have that might give you a competitive advantage and what are you doing about?

Eight Tips for Small Business Owners

noreply@blogger.com (laurence@exigent-uk.com) — Fri, 17 May 2013 16:48:00 +0000

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This month I have a guest blog from a writer at Nerdwallet. Since I have so many US readers I thought It might be nice for you to get a more local view of the issues surrounding Small Business. Having said that Angie provide some useful common sense advice that is valuable to any small business; especially those who are about to, or have just started as business owners.

"Let’s be honest, owning a small business nowadays is challenging. There are so many things to keep in mind, and as such, many variables to consider. It can get a bit flustering trying to sort out every piece of advice you hear. Let’s look at eight solid guidelines that should be staples of any small business owner’s, “things to remember” list.

1. Save up as much money as you can before starting.

One of the worst mistakes you can make is going into business with no capital saved up. Relying on loans from the bank, the SBA or friends is a great way to get you into debt. What some small business owners don’t realize is that it can take awhile for your business to start providing enough profit for you to pay the loan(s) back. If you business isn’t as profitable as expected your lender might just call in the loan, or you may have to pay it off with your credit card. Save enough to cover yourself for at least a year after you start your business.

2. Minimize costs.

Calculate out how much everything is going to cost you. Find how out how little you could possibly spend, and still be effective. Don’t rent out more space than you need, or hire more employees than you will need. You want to start small and keep your screw-ups small too. Give yourself time to learn and deduce the best way to go about things, before you shell out too much cash on this or that. It will save you money in the long run.

3. Safeguard your personal assets.

You must understand that once you start a business, you are liable for all debts and judgments that it incurs. This can include any judgments from lawsuits against your business, taxes, loans, or money owed to renters. To protect yourself from having your personal assets seized, you will want to get business liability insurance. This alone will not cover you against everything however, and you may want to consider forming a limited liability company.

4. Know how your business will be making a profit

You are going to want to crunch the numbers, analyze the data, and come up with a figure of how much you will be making, how much of it will be going back into the business, and how much actual profit you will be earning. Don’t forget to factor in all the costs of running your business, and figure out how much product you will need to sell.

5. Find your competitive edge and use it

Not every small business is successful, the ones who are doing things that nobody else is, or doing them better than anybody else is, are the ones who make the profit. Whether it’s a special marketing technique, survey method, or manufacturing short cut, find something you can use that nobody else is. You either have to have higher quality than your competitors, or be smarter than them. Once you find this competitive edge, it’s important to guard it. Don’t let anybody find out your secret to success, because it won’t be a secret anymore.

6. Put everything in writing

Oral agreements or deals made over handshakes are not reliable nowadays and it’s wise to put everything important in writing. Make a habit of giving and getting receipts for everything. You will need many contracts written up for things including storage agreements, service contracts, and leases. Don’t be the guy in court without any paper evidence of your claims.

7. Acquire quality employees

Hire employees who are both enthusiastic and highly skilled at their job. An enthusiastic employee will make your business environment much more friendly and appealing to customers. You want your employees to represent your company well on and off the job, and this is more likely to happen if your business is respectable. Pay your employees well and treat them with respect, the result will be worth more than the effort.

8. Pay your taxes!

As a business, you will be responsible for more than just your personal taxes. Especially important to pay on time are your payroll taxes. These can levy heavy fines if not paid on time. Stay up to date on everything you owe, and maybe even pay some bills early once in a while, it will pay off for your reputation.

Angie Picardo is a staff writer for NerdWallet. Her mission is to help consumers stay financially savvy, and save some money with the best online checking account."